The U.S. Securities and Exchange Commission announced that on May 12, 2000, the Honorable Anita B. Brody, U.S. District Court Judge in the Eastern District of Pennsylvania, issued a temporary restraining order, including an asset freeze, against James S. Saltzman ("Saltzman"), the managing general partner and investment adviser to Saltzman Partners, LP, a Pennsylvania limited partnership.

The Commission alleges in its complaint that from approximately 1994 to February 5, 2000, Saltzman misappropriated approximately $1.78 million in advisory client funds by diverting those funds to his personal bank account. As the managing general partner for Saltzman Partners, Saltzman maintained exclusive control over the partnership's investment portfolio and made all of its investment decisions. The Commission alleges that although the partnership's financial records reflect the $1.78 million diverted by Saltzman as "loans" to Saltzman, he misappropriated these funds because the transfers of funds to him did not comply with the specific provisions for loans to partners set forth in the private placement memorandum for Saltzman Partners. The purported loans were neither documented nor have they ever been repaid. The Commission alleges that Saltzman, in violation of his fiduciary duties to his advisory clients, failed to disclose his actions to the limited partners.

The Commission's complaint alleges that Saltzman has violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940.

The complaint seeks the entry of a permanent injunction against Saltzman, an order for disgorgement of ill-gotten gains and civil penalties. A hearing on the Commission's motion for a preliminary injunction is set for May 23, 2000.